Japan and India: a transformative entente

By Brahma ChellaneyJanuary 24, 2014
Asia's future rests on the strategic triangle of China, India, and Japan -- countries that have never before

been strong at the same time. In the coming years, Asian geopolitics will be greatly influenced by an inexorable tightening of the bonds between Japan and India, which hope to fend off China's growing assertiveness and territorial creep.

On the heels of the landmark Indian tour of Japan's Emperor Akihito and Empress Michiko last month, Prime Minister Shinzo Abe will be the guest of honor at India's Republic Day parade Jan. 26. This underscores the fast-developing partnership between Asia's second- and third-largest economies. The two countries are also ramping up defense cooperation, as agreed during a recent visit by Japanese Defense Minister Itsunori Onodera.Asia's balance of power will be determined principally by events in East Asia and the Indian Ocean. By linking these two regions, the emerging Indo-Japanese entente holds virtually the same potential to shape the future as China's ascent or America's "pivot to Asia."

Japan and India, natural allies strategically located on opposite flanks of the continent, have a pivotal role to play in ensuring a regional power equilibrium and safeguarding vital sea lanes in the wider Indo-Pacific region -- an essential hub for global trade and energy supply.

Complementary partners

The visit of Japan's Imperial couple in early December was a watershed moment in Japan-India relations. In the more than 2,600-year history of the Japanese monarchy -- the world's oldest continuous hereditary royalty -- no emperor had previously been to India, although India has traditionally been respected in Japan as Tenjiku, or the heavenly country of Buddhism.

New Delhi invited the emperor and empress a decade ago. But it was Abe, an admirer of India, who keenly supported their visit as a way to signal his government's commitment to forging closer ties with New Delhi. Now, Abe's chief-guest role at India's national day celebration adds meaning to his talk of a new "arc of freedom and prosperity" connecting Asia's two main democracies. If there is any potential pitfall to the partnership, it is their messy domestic politics.

The fact is that Japan has gone from aiding China's economic rise through technology transfers and generous official development assistance to trying to balance China's emergence as a military power. India overtook China a decade ago as the largest recipient of Japanese ODA, which includes loans, grants and technical assistance. Through its ODA, Japan is helping India improve its poor infrastructure, among other programs.

China's rising labor costs and political muscle-flexing are seen as risks for foreign investors. Meanwhile, India -- with its vast domestic market and large, young and cheap labor force -- is seeking to position itself as Japan's investment partner of choice. Japanese companies are themselves aiming for a more regionally balanced approach after years of focusing on China, which has absorbed much of Japan's emerging-market investments.

The resulting shift in foreign direct investment has turned Japan into India's largest source of FDI among major industrialized nations. A weakening yen is set to spur only greater Japanese capital outflows, allowing India to attract more Japanese investment to help fund its large current-account deficit.

The contrast between disciplined Japan and tumultuous India is striking. India has the world's largest youthful population, while Japan is aging more rapidly than any other developed country. Whereas India has always valued strategic autonomy, Japan remains a model U.S. ally that hosts not only a large U.S. troop presence but also pays generously for the upkeep of American forces on its soil. Japan's contribution surpasses the combined host-nation support of America's 26 other allies.

Yet the dissimilarities between Japan and India have much to do with the prospects for close collaboration. Japan's heavy-manufacturing base and India's services-led growth -- as well as their contrasting age structures -- make their economies complementary. India's human capital and Japan's financial and technological strength can be a good match to propel India's infrastructure development and great-power aspirations, as well as catalyze Japan's revival as a world power. There is clear potential for strong synergies.

The logic for strategic collaboration is no less compelling. If China, India and Japan constitute Asia's scalene triangle -- with China representing the longest Side A, India Side B, and Japan Side C -- the sum of B and C will always be greater than A. It is thus little surprise that Japan and India are seeking to add strategic bulk to their quickly deepening relationship.

Indeed, the world's most stable economic partnerships, such as the Atlantic community and the Japan-U.S. partnership, have been built on the bedrock of security collaboration. Economic ties lacking that strategic underpinning tend to be less stable and even volatile, as is apparent from China's economic relations with Japan, India, and the U.S.